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Fongpi, Home Buyer in

How common is it for a Buyer’s Agent to offer half of his own commission as a rebate to clients? Since his commission is 3%, that means I’ll get

Asked by Fongpi, Thu Jul 19, 2012

1.5% How common is it for a Buyer’s Agent to offer half of his own commission as a rebate to clients? Since his commission is 3%, that means I’ll get 1.5% back to me after the sale goes through. So that means my $875,000 condo purchase at Madrone in Mission Bay will yield me about a $14,000 rebate. I have never seen this before, is this some new thing? I’m assuming that my agent is doing this so I could give him referrals. So, if anyone is interested send me a PM and I’ll give you his info. I think he is offering this for Madrone only.

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Commission rebates are legal here, but 50% sounds like a lot, especially since your agent splits his commission with his/her broker. You might want to get that in writing.
2 votes Thank Flag Link Thu Jul 19, 2012
1 vote Thank Flag Link Thu Jul 26, 2012
I see you posted this question twice. In the other one you are fishing for business for your agent. And while you didn't start that way here, you're doing it again now. Add it all up and it looks pretty clear that you aren't a buyer at all. You're the agent fishing for business aren't you?
1 vote Thank Flag Link Thu Jul 19, 2012
It's not common but lousy unsuccessful agents offering to share thier income with buyers and sellers as a means of attracting business has been around for as long as I've been a full time Realtor. (twenty plus years)

Here's what you should ask yourself. Why would someone who only earns commission to support themselves and their family offer to pay you half of it if they were actually good at what they did and were busy? Understand commission is pre-tax income, and being self employed we pay the highest tax rates to begin with. then there business expenses such as a desk or office cost, the company share of the commission, marketing, advertising, internet, phone etc. The answer is their desperate and who would choose to work with someone desperate? If their willing to give away half their income, how hard to you think they'll fight on your behalf?

My advice is to beware the discount broker. There's a reason they discount and it's not a good one.

They are certainly welcome to practice their business anyway they want, and there are even national franchises that encourage such a business model. True experienced professional Realtors would never do this, as there simply no reason to and trust me I love taking advantage of these poorly trained, inexperienced, weak agents on behalf of my clients.
0 votes Thank Flag Link Thu Jul 26, 2012
This reply is a good example of the "old-guard" real estate agents resisting changing business practices by bad-mouthing those who adopt a more competetive business model. It's flat out nonsense that "a true experienced professional Realtor would never do this". Plenty do. Here's one example: I am an astute, self-reliant, independent buyer. I do my own research, CMAs, financial modeling, and I pay all cash. I don't use agents to schlep me around town showing me properties, I don't waste their time, and when I'm ready to make a fair offer, there are PLENTY of smart, experienced and successful agents who would willingly trade 2 hours work of preparing and presenting an offer, in exchange for a reduced commission. Would it be reasonable to demand a 50% rebate from a buyer's agent who has put in months helping you find a property? No. But there is more than one kind of buyer, more than one kind of commission model, and no amount of badmouthing from you will change that.
Flag Mon Oct 8, 2012
Buyers rebates are legal here in NYS as well as long as you follow the rules.
(Below my comments is an excerpt from the US DOJ website and I've also posted a link their site)
Here are how the different scenarios would work:
a: If the buyer's agent was also the listing agent (which would present issues as to who they represent) and the broker of record, then the agent would get 100% of the commission.
b: If they are both the listing agent and the buyer's agent (again a conflict of interest) their broker would be getting 50% +/- of both sides of the commission and the agent would get the balance.
c: if they were the broker of record and they are representing the buyer who is buying another broker's listing then usually they would get 50% of the commission
d: (And this is the most common agent situation) The broker of record and the agent split the selling broker's commission (often less or more than 50-50) and the broker and the buyer's agent split the buyer's side (co-broke) of the commission (again could be an uneven spilt)
All commissions are negotiable so it's possible the property was listed with a commission from 0% to whatever so I wouldn't assume the rebate is 1.5% or even .0075% unless you have that in writing.
Please let us know how this all pans out!
From the DOJ:
"May a real estate agent rebate a portion of the agent's commission to the borrower? If so, how should the rebate be listed on the HUD-1?
According to HUD, yes, real estate agents may rebate a portion of the agent's commission to the borrower in a real estate transaction. The rebate must be listed as a credit on page 1 of the HUD-1 in Lines 204-209 and the name of the party giving the credit must be identified.
Real estate agent or broker commission rebates to borrowers do not violate Section 8 of RESPA as long as no part of the commission rebate is tied to a referral of business."
0 votes Thank Flag Link Thu Jul 26, 2012
Wow, you're so skeptical of people. In case you haven't noticed, it was my first post and I didn't see it go through the first time.
0 votes Thank Flag Link Thu Jul 19, 2012
To anyone interested in contacting my agent for a 50% rebate on his fee, please send me your contact info, my email is fongpi@gmail.com. He saved me 14k right off the bat and is also helping to negotiate closing costs for my condo at Madrone in Mission Bay!
0 votes Thank Flag Link Thu Jul 19, 2012
How do i send a PM to you, no link on the site?
0 votes Thank Flag Link Thu Jul 19, 2012
If you want my agents info drop me an email fongpi@gmail.com
Flag Thu Jul 19, 2012

I totally agree with Jed below. I hope you got a good price and all the credits from the seller that you could have recieved. This can add up to a lot more than you may save in the commision credit.

Hopefully your lender will also be OK with this and the Developer of the building / contract that you have signed.
0 votes Thank Flag Link Thu Jul 19, 2012
In some states this is illegal, there are a few that do allow it if it is on the HUD and disclosed to your mortgage company. Remember a discount broker usually offers discount services. In this world we often get what we pay for. A good buyer broker should save you as much as their fee so their fee does not cost anything. The selling agent often pays the fee to the buyer agent, not the buyer. SOme areas have different customs though. Just decide how much representation you want, all or half? You wouldnt go to a discount heart doctor per say....
0 votes Thank Flag Link Thu Jul 19, 2012
There are a number of companies that offer rebates for buy side transactions. Agencies in California and Washington have been doing that for years, my firm at http://www.calpmg.com (since 2009) and my former employer at http://www.redfin.com (since 2006) do something similar.

The one thing that needs to be addressed is service. Does receiving a rebate for a buy side transaction decrease the amount of service that the buyer receives? We say "No". I started my firm with the idea that rebates don't discount the level of service or professionalism. We feel that we can help buyers and earn less commission but still deliver a better valued experience. We don't over work our agents and make sure that they have the tools and the time to be the ultimate advocate.


I wish you the best of luck with your purchase. The Madrone by Bosa is a nice community.

Maximillian Diez
RE Broker
Licensed in CA. 01291288
0 votes Thank Flag Link Thu Jul 19, 2012
Be sure to report the refund to the bank otherwise you will be quilty of lender fraud which is a federal crime.
This can be done but those of us that don't buy business believe that we deliver value for our earnings. I know that you think $14,000 is a lot of money but a really good agent, someone who doesn't have to buy clients, can negotiate that and more for you.
Be careful.
0 votes Thank Flag Link Thu Jul 19, 2012
Jed Lane, Real Estate Pro in San Francisco, CA
I don't know about where you are, but that is illegal here. It's called a "kickback". There are probably several ways around this to accomplish a similar thing without running afoul of the law, but they are not things that I have ever done.
0 votes Thank Flag Link Thu Jul 19, 2012
Roland actually buyers rebates are legal in New York State and are recommended by the US DOJ. Please check out my blogs here on Trulia where I've posted some details and links to the DOJ site about buyers rebates.
Flag Thu Jul 26, 2012
Roland -- Buyer Agent rebates are legal here in California, so it's perfectly fine what he/she is doing.
Flag Thu Jul 19, 2012
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